SIE simulated exam missed questions

Anna, a manager for Great Plains Securities, resigns her position and surrenders her principal registrations in order to return to being a registered representative with no management duties. She will continue at the same firm and in the same office. How many days does the firm have to file Form U5? A) 30 days B) 10 days C) 45 days D) 60 days

A) 30 days This is an example of a partial termination. Anna is terminating her principal registration, but not her representative registrations. The form must be filed within 30 days.

A letter of intent may be backdated to include a prior purchase up to A) 13 months. B) 90 days. C) indefinitely. D) 6 months.

B) 90 days. LOIs may be backdated up to 90 days. The obligation under the LOI must be met within 13 months from the date of the letter.

Underwriters who are assisting an issuer in bringing securities to the investing public can do which of the following between the time the registration was filed with the Securities and Exchange Commission (SEC) and the effective date? A) Mail sales literature to those who have expressed an interest in purchasing the securities. B) Distribute a preliminary prospectus to the investing public. C) Make a binding offer to sell the securities. D) Solicit orders from investors to purchase the securities.

B) Distribute a preliminary prospectus to the investing public. The time between the registration filing date with the SEC and the effective date is known as the cooling-off period. During this time, a preliminary prospectus may be distributed to gauge investor interest but no offers to sell the securities can be made and no orders to purchase the securities can be taken. While a preliminary prospectus and tombstone ad can be used, sales and advertising literature specific to the securities cannot be.

Which of the following is a benchmark for large cap stocks? A) Wilshire 5000 B) Standard and Poor's 500 Index C) Dow Jones Utilities Index D) Russell 2000® Index

B) Standard and Poor's 500 Index

Good delivery of a stock certificate requires all of the following except A) the correct number of shares are delivered. B) proper signatures of a firm principal on the certificate. C) proper endorsement by all owners. D) certificates in good condition.

B) proper signatures of a firm principal on the certificate. The broker-dealer does not sign the certificate. All the rest of these are requirements.

A customer who tries to disguise deposits of more than $10,000 in currency by making multiple smaller deposits in currency is guilty of A) layering. B) structuring. C) placement. D) integration.

B) structuring. Placement, layering, and integration are phases of money laundering. Making multiple deposits to stay under the radar of having a CTR filed is structuring.

All of the following would be acceptable methods for the customer opting out of allowing the broker-dealer to share their nonpublic personal information except A) checking a box. B) writing a letter. C) opting out electronically. D) calling a toll-free number.

B) writing a letter. Writing a letter is considered too difficult. The process to opt-out must be virtually effortless.

Which of the following would cause a mutual fund's net asset value (NAV) per share to fall? I. The fund purchases securities for the portfolio. II. The fund pays a dividend to shareholders. III. The market value of the portfolio declines. IV. A large number of shares are redeemed.

II and IIII Paying a dividend and suffering market decline both reduce the net assets of the fund without reducing the number of shares; hence, the NAV declines. Purchasing portfolio securities simply replaces portfolio cash with an equivalent value of securities; hence the NAV remains unchanged. Redemption of shares reduces the fund's net assets, but the number of shares declines by an equivalent proportion; hence, the NAV remains unchanged.

Your client, Bill Hearst, inherited several thousand shares of his grandfather's auto parts manufacturer, National Autoparts. He sells a portion of the position in order to raise some cash to buy a new boat. Which of these is true? This is a secondary market transaction. This is a primary market transaction. This is a long sale of the stock. This is a short sale of the stock (he never purchased it).

I and IV The issuer has no part of this transaction; it is considered a secondary market transaction. It does not matter that Bill did not buy the shares; it matters that he owned them. This is a long sale.

The current quote for Generic Motors stock is bid 32-ask 32.05 5 × 2. Your customer places an order to sell 300 shares. How much will they likely receive, before commission? A) $9,615 B) $3,200 C) Cannot be determined because only 200 shares are available on this side of the quote D) $9,600

D) $9,600 Your customer will sell at the bid (32), or likely very close to it. The bid size is 500 shares so the market can absorb the entire order. 32 × 300 = $9,600. Customers who are selling receive the bid. Those who are buying pay the ask. The size shows bid × ask; 500 shares may be sold at 32 and 200 shares are available to buy at 32.05.

What are the two basic types of return on an investment? A) Interest and principal B) Short term and long term C) Dividends and interest D) Capital gains and income

D) Capital gains and income Upon the purchase of a security, the investors may receive dividends or interest, which are forms of income, or they may sell the security for a different price than was paid for it, which represents a capital gain or loss.

**A corporation enlists the services of a transfer agent, who would be expected to handle all of the following functions except A) filing an S-1 registration statement. B) canceling old certificates and issuing new ones. C) maintaining records of shareholder ownership. D) replacing lost or destroyed stock certificates.

A) filing an S-1 registration statement. The transfer agent for a corporation is responsible for ensuring that its securities are issued in the correct owner's name; canceling old certificates and issuing new ones; maintaining records of ownership; and handling problems relating to lost, stolen, or destroyed certificates. It is the registrar—a separate entity—who is responsible for registering the corporation's securities with the state.

Under regulation S-P, nonpublic personal information would not include a customer's A) home address. B) account balance. C) social security number. D) information collected through an internet cookie.

A) home address. The Securities and Exchange Commission (SEC) in Regulation S-P notes examples of nonpublic personal information to include a customer's Social Security number, account balances, transaction history, and any information collected through an internet cookie. A home address would not be considered nonpublic personal information.

mutual fund has been in existence for three years. The prospectus must disclose the fund's performance A) over the last one year and the life of the fund. B) over the life of the fund only. C) for only the past year. D) averaged out as if the fund had existed for 10 years.

A) over the last one year and the life of the fund. The prospectus of a mutual fund must show the fund's performance over the last 10 years or the life of the fund, whichever is shorter. The data must be shown as the last year's performance, the performance over the last five years, and the performance over the last 10 years. If a fund has less than 10 years of performance records, it must disclose the intermediate time frames if it has them (one and five years) and the performance for the life of the fund.

All of the following must be on the cover page or beginning of the summary prospectus of a mutual fund except A) the name of the investment advisor. B) the website where a full prospectus may be downloaded. C) the fund share class or classes ticker symbols. D) the share class or classes offered by the fund.

A) the name of the investment advisor. The summary prospectus, as the name implies, contains the important information about a mutual fund in summary form. The cover page must contain a standardized listing of certain information, including the fund's name, share classes offered, ticker symbols, information on how to get a full prospectus, a warning that the information is in summary form, and other facts. There is no requirement that the name of the investment adviser be on the cover page of the summary prospectus.

Which of the following features of preferred stock allows the holder to reduce the risk of inflation? A) Cumulative B) Callable C) Convertible D) Noncumulative

C) Convertible Fixed-dollar investments, such as bonds and preferred stock, are subject to inflation risk, which is the risk that the fixed interest or dividend payments will be worth less over time in terms of purchasing power. The ability to convert to common stock, which tends to keep pace with inflation, offsets this risk.

Which of the following is true regarding taxation of dividends paid by American depositary receipts? A) The dividends may be subject to withholding by the U.S. government. B) Any funds withheld may be paid to the investor by the foreign government. C) Dividends are received tax free by U.S. investors. D) The dividends may be subject to withholding by the foreign government.

D) The dividends may be subject to withholding by the foreign government. Dividends paid to a U.S. investor may be subject to a withholding tax by the home country of the underlying foreign stock issuer. In many cases, the amount of tax withheld by the foreign government is applied as a credit against the investor's U.S. tax liability. These withheld funds are paid out by the U.S. government to the investor, not the foreign government. These dividends are taxed as investment income.

A hypothecation agreement would be best described as A) a loan consent form which gives permission to the firm to loan the customers margin securities to other customers or broker-dealers. B) a partnership agreement stating which of the partners can make transactions for a partnership account. C) a written disclosure of the terms of the credit extended by the broker-dealer, including the method of interest computation and situations under which interest rates may change. D) a contract allowing securities to be pledged for the loan.

D) a contract allowing securities to be pledged for the loan. A signed hypothecation agreement permits the pledging of customer securities as collateral for margin loans.

Regarding options, it should be recognized that the maximum movement for any underlying stocks price could be A) as low as zero or as high as its breakeven point. B) as low as its breakeven or as high as its maximum gain point. C) its breakeven. D) as low as zero or as high as infinity.

D) as low as zero or as high as infinity. Any stock's price could move as low as zero or as high as infinity. That movement toward either of those points, and the market attitude of the option position employed (bullish or bearish), determines what the maximum gain, loss, or breakeven point is.

When an index option is exercised, the writer will deliver to the buyer A) cash equal to the in-the-money amount on the second business day. B) securities underlying the contract on the second business day. C) securities underlying the contract on the next business day. D) cash equal to the in-the-money amount the next business day.

D) cash equal to the in-the-money amount the next business day. There is no underlying security to deliver with an index option. The writer of the contract pays the buyer of the contract the in-the-money amount the next business day. Note that a buyer would only exercise a contract if it was in the money.